Rather than build one giant solar power plant, PG&E plans to generate solar power from a collection of midsize projects, from 1 megawatt to 20 megawatts. This investment will cover half of the total target of power generation.

Photo by Martin LaMonica/CNET Networks

One megawatt is enough to power one large retail store or roughly 300 homes. A large solar installation at a single business, such as Google's rooftop array and solar carport, can be over 1 megawatt in generating capacity.

Solar photovoltaic panels will be mounted on rooftops or mounted on poles in PG&E's service area in Northern and Central California. The utility will seek to install the panels on land it already owns or near substations to avoid having to build new transmission lines, it said.

PG&E will rely on outside providers for the other 250 megawatts. If operating by 2015, the electricity will be enough to power 150,000 homes annually and account for 1.3 percent of PG&E's electrical demand.

The move is one of the largest solar-power projects to date and significant because it represents the first time in more than 10 years that PG&E has invested directly in renewable energy. Until now, it typically purchased electricity from third-party clean-energy project developers.

Many project developers and financiers are unable to take advantage of the 30 percent renewable-energy tax credit because they don't anticipate having a tax bill. Because PG&E has a "tax appetite" and can take advantage of the tax credit, the utility is investing directly in solar energy, CEO Peter Darbee said last month when he first mentioned the solar project.

California has a renewable portfolio standard that mandates that utilities get 33 percent of their electricity from renewable sources by 2020. In the past month, two other large solar projects--one with NRG Energy and one with Southern California Edison--were announced.

Because the recently passed stimulus package now allows utilities to take advantage of the 30 percent tax credit, more utilities will build and own solar facilities, said Julia Hamm, the executive director of the Solar Electric Power Association, in a statement.

Environmental advocacy group Natural Resources Defense Council lauded the PG&E plan because building distributed solar power is a relatively quick way to deploy the technology.

"PG&E's intent for development of these projects--on already developed land close to transmission and distribution--is exactly where it needs to be to reduce environmental impacts and speed development," said Sheryl Carter, Energy Program co-director at the NRDC, in a statement.

PG&E said that it submitted the plan on Tuesday to the California Public Utilities Commission and that it could be approved later this year.